As Europe’s carbon tax hovers closer, India rushes steelmakers to go green

livemint.com:

NEW DELHI : India’s steel ministry has asked all major exporters of the alloy to focus on reducing their carbon footprint as the European Union prepares to tax companies that do not meet its environmental standards. The EU’s carbon border adjustment mechanism, or CBAM, proposes a tax on embedded carbon imports from sectors including steel, aluminium, cement, hydrogen, electricity, and fertiliser from 1 January.

While India is exploring tariff and non-tariff measures to counter CBAM, it wants the country’s steelmakers to develop carbon-capture technologies as well as replace coal with green hydrogen to fire their furnaces, according to government officials aware of the development. The ministry has in recent meetings with steel producers including Tata Steel Ltd, Jindal Steel and Power Ltd, and JSW Steel asked them to begin pilot projects aimed at reducing emissions from their existing facilities, the officials said, asking not to be identified.

The steel ministry did not immediately reply to emailed queries. India’s steel industry is on unparalleled expansion spree to add fresh capacity, and poised to witness an all-time-high capacity addition of 15.6 million tonnes per annual (mtpa) in the ongoing financial year, FY2024-25.

But the Indian steel industry’s carbon emission intensity is much higher than global standards. Indian steel producers face challenges in reducing their carbon footprint because their average emission intensity from blast furnaces is 2.6 million tonnes of carbon emission per million tonne of crude steel production, which is 12% higher than the global average, according to rating agency Icra.